Quarterly Report (10-q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-21755

iGATE CORPORATION

(Exact name of registrant as specified in its charter)


PENNSYLVANIA		25-1802235
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Somerset Corporate Blvd Bridgewater, NJ		08807
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (510) 896-3015

6528, Kaiser Drive, Fremont, CA 94555

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of April 14, 2014 was 58,809,797.

iGATE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2014

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	—Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2014 and 2013		3

	—Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2014 and 2013		4

	—Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013		5

	—Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013		6

	—Notes to Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48

Item 4.	Controls and Procedures		49

PART II. OTHER INFORMATION			50

Item 1	Legal Proceedings		50

Item 1A.	Risk Factors		50

Item 6.	Exhibits		51

SIGNATURES			52

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2014			2013
Revenues ⁽¹⁾	$	302,206		$	274,918
Cost of revenues (exclusive of depreciation and amortization)		188,780			170,239

Gross margin		113,426			104,679
Selling, general and administrative expense		42,661			42,792
Depreciation and amortization		9,558			9,271

Income from operations		61,207			52,616
Interest expense		(23,629	)		(22,657	)
Foreign exchange gain, net		204			2,481
Other income, net		7,354			17,280

Income before income taxes		45,136			49,720
Income tax expense		13,425			14,960

Net income		31,711			34,760
Non-controlling interest		95			0

Net income attributable to iGATE Corporation		31,616			34,760
Accretion to preferred stock		139			115
Preferred dividend		8,139			7,500

Net income attributable to iGATE common shareholders	$	23,338		$	27,145


Basic earnings per share :
Common stock	$	0.29		$	0.36
Unvested restricted stock	$	0.00		$	0.36
Series B Preferred Stock	$	0.68		$	0.75
Diluted earnings per share	$	0.29		$	0.34

1. Includes the following related party amounts:

Revenue	$	6,335		$	487

See accompanying notes.

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
	2014			2013
Net income attributable to iGATE common shareholders	$	23,338		$	27,145
Add: Non-controlling interest		95			0
Other Comprehensive Income:
Change in fair value of marketable securities, net of tax of $(343) and $(1,492), respectively		(613	)		(2,710	)
Unrecognized actuarial gain on pension liability, net of tax of $162 and $116, respectively		316			313
Change in fair value of cash flow hedges, net of tax of $2,255 and $1,271, respectively		4,382			3,039
Gain on foreign currency translation		29,573			17,383
Total comprehensive income		57,091			45,170
Less: Total comprehensive income attributable to non-controlling interest, net of tax of $13 and $0, respectively		268			0

Total comprehensive income attributable to iGATE common shareholders	$	56,823		$	45,170

See accompanying notes.

iGATE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)


	March 31, 2014 (Unaudited)			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	237,944		$	204,836
Restricted cash		360,000			360,000
Short-term investments		162,196			181,401
Accounts receivable, net of allowances for doubtful accounts of $3,001 and $4,103, as of March 31, 2014 and December 31, 2013, respectively		147,214			157,905
Unbilled revenues		88,223			61,424
Prepaid expenses and other current assets		53,473			44,492
Prepaid income taxes		9,800			838
Deferred tax assets		5,937			10,235
Foreign exchange derivative contracts		6,671			836
Receivable from related parties		6,471			4,046

Total current assets		1,077,929			1,026,013

Deposits and other assets		23,681			24,930
Prepaid income taxes		34,644			32,160
Property and equipment, net of accumulated depreciation of $116,889 and $108,084, as of March 31, 2014 and December 31, 2013, respectively		180,917			165,581
Leasehold land		78,405			76,732
Deferred tax assets		15,154			15,153
Goodwill		452,911			438,891
Intangible assets, net		120,294			119,262

Total assets	$	1,983,935		$	1,898,722

LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,489		$	9,268
Line of credit		52,000			52,000
Senior Notes		770,000			360,000
Term loans		90,000			90,000
Accrued payroll and related costs		46,060			57,093
Other accrued liabilities		101,232			79,785
Accrued income taxes		2,794			5,802
Foreign exchange derivative contracts		15			909
Deferred revenue		13,254			17,776

Total current liabilities		1,088,844			672,633
Other long-term liabilities		4,188			3,532
Senior Notes		0			410,000
Term loans		270,000			270,000
Accrued income taxes		22,117			13,936
Deferred tax liabilities		37,315			41,717

Total liabilities		1,422,464			1,411,818

Commitments and Contingencies (Note 18)
Series B Preferred stock, without par value: 480,000 shares authorized; 330,000 shares issued and outstanding		418,649			410,371
iGATE Corporation shareholders’ equity:
Preferred shares, without par value: 19,520,000 shares authorized; 1 share held in treasury		0			0
Common shares, par value $0.01 per share:
700,000,000 shares authorized; 59,797,634 and 59,428,151 shares issued; 58,807,532 and 58,438,049 shares outstanding as of March 31, 2014 and December 31, 2013, respectively		598			594
Common shares held in treasury, at cost, 990,102 shares		(14,714	)		(14,714	)
Additional paid-in capital		213,337			204,143
Retained earnings		292,088			268,750
Accumulated other comprehensive loss		(353,630	)		(387,115	)

Total iGATE Corporation shareholders’ equity		137,679			71,658
Non-controlling interest		5,143			4,875

Total equity		142,822			76,533

Total liabilities, preferred stock and shareholders’ equity	$	1,983,935		$	1,898,722

See accompanying notes.

iGATE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Three Months Ended March 31,
	2014			2013
Cash Flows From Operating Activities:
Net income	$	31,711		$	34,760
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		9,558			9,271
Stock-based compensation		4,297			3,125
Realized gain on investments		(5,108	)		(15,277	)
Deferred gain on settled derivatives		0			37
Recovery of doubtful debts		(1,149	)		(61	)
Deferred income taxes		(962	)		(2,161	)
Amortization of debt issuance costs		2,295			2,399
Loss on sale of property and equipment		47			26
Deferred rent		290			(52	)
Excess tax benefits related to stock option exercises		(2,554	)		(387	)
Changes in operating assets and liabilities:
Accounts receivables and unbilled receivables		(16,684	)		(9,100	)
Prepaid expenses and other assets		(3,482	)		(6,587	)
Accounts payable		3,220			4,937
Accrued and other liabilities		253			(2,243	)
Deferred revenue		(4,558	)		(5,395	)

Net cash flows provided by operating activities		17,174			13,292

Cash Flows From Investing Activities:
Purchase of property and equipment		(15,974	)		(6,356	)
Proceeds from sale of property and equipment		80			43
Purchase of available-for-sale investments		(184,786	)		(599,984	)
Proceeds from maturities and sale of available-for-sale investments		213,053			627,387
Restricted cash		0			3,052
Receipts from (payments of ) lease deposits		0			301
Purchase of non-controlling interests		0			(5,370	)

Net cash flows provided by investing activities		12,373			19,073


Cash Flows From Financing Activities:
Payments on capital lease obligations		(111	)		(200	)
Payment of line of credit and term loans		0			(30,000	)
Payment of debt related costs		0			(2,394	)
Proceeds from exercise of stock options		2,347			374
Excess tax benefits related to stock option exercises		2,554			387

Net cash flows provided by (used in) financing activities		4,790			(31,833	)

Effect of exchange rate changes		(1,229	)		(841	)

Net change in cash and cash equivalents		33,108			(309	)
Cash and cash equivalents, beginning of period		204,836			95,155

Cash and cash equivalents, end of period	$	237,944		$	94,846

See accompanying notes.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

1.	Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of iGATE Corporation (“iGATE” or the “Company”) have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and disclosures required by GAAP. In the opinion of the management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included.

The accompanying balance sheet and financial information as of December 31, 2013 is derived from audited financial statements but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2013.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Interim results are not necessarily indicative of results for a full year.

2.	Goodwill and Intangible Assets

The changes in the carrying value of goodwill for the three months ended March 31, 2014 are as follows (in thousands):


	Amount
Goodwill as of December 31, 2013	$	438,891
Foreign currency translation effect		14,020

Goodwill as of March 31, 2014	$	452,911

The changes in the carrying value of intangibles for the three months ended March 31, 2014 are as follows (in thousands):


	Amount
Intangible assets as of December 31, 2013	$	119,262
Foreign currency translation effect		3,612
Amortization		(2,580	)

Intangible assets as of March 31, 2014	$	120,294

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

As of March 31, 2014, intangible assets were comprised of the following (in thousands):


	Amount
Customer relationships	$	189,844
Intellectual Property Rights		9,400
Foreign currency translation adjustments		(45,537	)
Amortization		(33,413	)

Intangible assets as of March 31, 2014	$	120,294

As of March 31, 2014 and December 31, 2013, accumulated amortization expense related to Intellectual Property Rights amounted to $4.5 million and $4.1 million, respectively, and Customer relationship amounted to $28.9 million and $26.7 million, respectively. Intangible assets are amortized over the remaining weighted average period of 11.8 years. Intellectual Property Rights are amortized over a weighted average period of 3.2 years. Customer relationship is amortized over its remaining useful life of 12.1 years.

Amortization expenses related to identifiable intangible assets were $2.6 million and $2.8 million for the three months ended March 31, 2014 and 2013, respectively. Future estimated annual amortization is as follows (in thousands):


	Amount
Remainder of 2014		8,162
2015		11,273
2016		11,657
2017		11,229
2018		10,385

3.	Series B Preferred Stock

On January 10, 2011, the Company entered into a securities purchase agreement, with Viscaria Limited, to raise equity financing to pay a portion of the cash consideration for the acquisition of iGATE Computer Systems Limited (“iGATE Computer”). Under the securities purchase agreement, the Company agreed to sell, in a private placement, up to 480,000 shares of newly designated 8.00% Series B Convertible Participating Preferred Stock, no par value per share (the “Series B Preferred Stock”), for an aggregate purchase price of up to $480 million. On February 1, 2011 and May 9, 2011, the Company issued 210,000 shares and 120,000 shares, respectively, of the Series B Preferred Stock for a consideration of $330 million.

Significant economic terms of the Series B Preferred Stock include:

•

accrues cumulative dividends at a rate of 8.00% per annum, which dividends will be added to the liquidation preference of the Series B Preferred Stock and compounded quarterly;

•

is entitled to participate in dividends and other distributions payable on the Company’s common stock on an as-converted basis;

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

•

provides for a holder option to convert the outstanding principal plus accrued and unpaid dividends into the Company’s common stock at any time and from time to time at an initial conversion price of $20.30 per share (which conversion price is subject to adjustment in certain circumstances such as the Company’s sale or issuance of shares of common stock is for a price per share less than the current market price of its common stock on the date of sale or issue (other than issuances under the stock option or stock ownership plans), subdivision or combination of the Company’s common stock (e.g. by stock split or stock dividend), wherein the conversion price in effect will be proportionately reduced or increased on or after such effective or record date and merger, reorganization, consolidation or sale of substantially all of the assets);

•

is subject to a Company option to convert the Series B Preferred Stock into common stock of the Company after 18 months from the applicable closing date if, among other things, the volume weighted average price of the Company’s common stock exceeds 205% of the then applicable conversion price for a specified period of time;

•

is redeemable for cash at an amount equal to the outstanding principal plus accrued and unpaid dividends upon the exercise of the holder’s put right at six years from the last occurring closing date;

•

provides that, if the Series B Preferred Stock is not sooner converted, such preferred stock is subject to a mandatory conversion into shares of the Company’s common stock on the date that is six years from the applicable closing date (subject to extension in limited circumstances) unless the holder exercises the put right described in the immediately preceding bullet point; and

•

provides the holder the right to receive, prior to any payment in respect of any junior equity securities, the greater of the outstanding principal plus accrued and unpaid dividends and the as-converted value upon liquidation of the Company or upon certain changes of control.

The Company incurred issuance costs amounting to $3.4 million which have been netted against the proceeds received from the issuance of Series B Preferred Stock. The Series B Preferred Stock is being accreted over a period of six years. The amount accreted totaled $0.1 million during each of the three months ended March 31, 2014 and 2013. As of March 31, 2014 and 2013, the remaining unamortized balance of issuance costs was $2.1 million and $2.6 million, respectively.

The Company is accruing for cumulative dividends at a rate of 8.00% per annum, compounded quarterly. The amount of such dividends accrued during the three months ended March 31, 2014 and 2013 was $8.1 million and $7.5 million, respectively.

As of March 31, 2014 and 2013, the shares of Series B Preferred Stock are potentially convertible into 20.7 million and 19.1 million shares of common stock, respectively.

4.	Borrowings

Line of Credit

On February 21, 2011, the Company entered into an arrangement with a bank for availing an unsecured revolving working credit facility of $70.0 million at an annual interest rate of LIBOR plus 195 basis points. Effective March 25, 2013, the interest rate was changed to LIBOR plus 115 basis points. As of March 31, 2014, the Company had unused facility of $18.0 million under this line of credit.

On May 10, 2011, the Company entered into a credit agreement with a bank for revolving credit commitments in an aggregate principal U.S. Dollar equivalent of $50.0 million, maturing on May 10, 2016. The proceeds are to be used for working capital and other general corporate purposes. This facility carries an interest rate of LIBOR plus 280 basis points. As of March 31, 2014, the Company had unused facility of $50.0 million under this revolving credit.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

Term Loans

On November 22, 2013, Pan-Asia Global Solutions (“Pan-Asia”), a 100% owned subsidiary of the Company, entered into a credit arrangement for a secured term loan facility with a consortium of banks, in an aggregate principal $360 million, which was availed in two tranches, comprising of $270 million maturing 60 months from the utilization date of November 25, 2013, carrying an interest rate of LIBOR plus 325 basis points and $90 million maturing 9 months from the utilization date of November 25, 2013, carrying an interest rate of LIBOR plus 200 basis points. This facility was undertaken to pay down a portion of Senior Notes in April 2014. iGATE Technologies Inc.(“iTI”), the immediate parent company of Pan-Asia, pledged 65% of its equity investment amounting to $298.1 million in Pan-Asia. The loan documents contain customary representations and warranties, events of default, affirmative, negative covenants and financial covenants and the loan was guaranteed by the Company and several of its 100% owned subsidiaries. The facility also has a claw back provision to return the funds on demand, in the event of non utilization of the funds by June 30, 2014, to pay down a portion of Senior Notes.

As of March 31, 2014, the Company was in compliance with all covenants associated with the aforementioned borrowings.

5.	Senior notes

On April 29, 2011, the Company sold $770 million of 9.0% Senior Notes due May 1, 2016 (the “Existing Notes”) through a private placement. On December 13, 2011, the Company issued a prospectus pursuant to a Registration Rights Agreement which granted the initial purchasers and any subsequent holders of the Senior Notes certain exchange and registration rights. The exchange offer was completed and, as of February 14, 2012, all the Senior Notes were tendered by the Note holders. These Senior Notes are now tradable. The interest is payable semiannually in cash in arrears on May 1 and November 1 of each year, beginning on November 1, 2011. The Senior Notes are senior unsecured obligations of the Company, guaranteed by the Company’s domestic 100% owned subsidiaries, as identified in Note 17, with exceptions considered customary for such guarantees under which a subsidiary’s guarantee would terminate.

The terms of the Indenture governing the Senior Notes, among other things, limits the ability of the Company and its restricted subsidiaries to (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock or repurchase their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets; (v) create liens or use assets as security in other transactions; (vi) merge, consolidate or transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. These covenants are subject to a number of important limitations and exceptions that are described in the Indenture. The Indenture also contains certain financial covenants relating to Consolidated Priority Debt Leverage Ratio and a Fixed Charge Coverage Ratio that the Company is required to comply with, when any of the above events occur. As of March 31, 2014, the Company is in compliance with the above mentioned ratios.

The Company opted to exercise the “Optional Redemption” and redeem the Notes in whole on April 22, 2014 (“Redemption Date”) and accordingly served the conditional notice to the Note holders on March 20, 2014 calling for redemption of entire outstanding $770 million aggregate principal amount of the Existing Notes. Accordingly, as of March 31, 2014, the whole amount of Senior Notes of $770 million is disclosed as current liability.

The Redemption of the Existing Notes is being done by refinancing it partly with new 4.75% Senior Notes due 2019 amounting to $325 million which was completed on April 2, 2014 together with term loan proceeds of $360 million from a consortium of banks (refer Note 4 on Borrowings), cash generated by the operations of Company and utilization of the Revolving Credit Facility, if required (refer Note 21 on Subsequent Events).

As of March 31, 2014, the unamortized debt issuance cost of $15.9 million is recorded in prepaid expenses and other current assets. The amount amortized for the three months ended March 31, 2014 and 2013 was $1.7 million and $1.5 million, respectively. Interest expense (including amortized debt issuance costs) for the three months ended March 31, 2014 and 2013 was $19.0 million and $18.8 million, respectively.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

6.	Income tax

The provision for income taxes consists of provisions for federal, state and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside the U.S. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as India, Canada and the United States.

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit applicable to those items is recorded in the same period as the related item. The Company’s effective tax rate (“ETR”) was 29.7% and 30.1% for the three months ended March 31, 2014 and 2013, respectively.

The difference in the ETR as compared to the U.S. statutory rate of 35.0% is primarily attributable to the tax holiday benefits enjoyed by the Company’s subsidiary in India and tax benefits claimed on filing the amended tax returns for earlier years in India jurisdiction and on account of reassessment of India tax positions for the open assessment years.

Under the Indian Income-tax Act, 1961, iGATE Global Solutions Limited (“iGATE Global”) is eligible to claim an income tax holiday on profits derived from the export of software services from divisions registered under Special Economic Zone (“SEZ”) arrangements. Profits derived from the export of software services from these divisions registered under the SEZ scheme are eligible for a 100% tax holiday during the initial five consecutive assessment years followed by 50% for the subsequent five years, and 50% for another five years subject to fulfillment of certain conditions; from the date of commencement of operations by the respective SEZ. For the three months ended March 31, 2014 and 2013, the tax holiday benefits were $1.5 million and $2.3 million, respectively. This SEZ tax holiday will begin to expire from March 2023 through 2028.

As of March 31, 2014 and December 31, 2013, total gross unrecognized tax benefits, excluding related interest and penalties, were $24.1 million and $16.6 million respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	As of March 31, 2014
Beginning Balance as of January 01, 2014	$	16,569
Additions based on prior period tax positions		7,428
Foreign currency translation effect		77

Ending Balance as of March 31, 2014	$	24,074

The Company recognizes interest related to uncertain tax positions within the interest expense line in the consolidated statements of income. During the three months ended March 31, 2014, the Company has recorded interest expense of $1.0 million related to uncertain tax positions in the condensed consolidated statements of income. The total amount of accrued interest in the condensed consolidated balance sheet amounted to $1.7 million as of March 31, 2014.

As of March 31, 2014, the Company had $21.4 million of net unrecognized tax benefits arising out of the tax positions which would affect the effective tax rate, if recognized. The nature of the events that would cause the change to the reserves will be mainly due to the expiry of the statute of limitation in the U.S. and completion of assessment for all open assessment years. Although it is difficult to anticipate the final outcome on timing of resolution of any particular uncertain tax position, the Company believes that the total amount of net unrecognized tax benefits will be decreased by approximately $6.2 million during the next twelve months due to the expiration of the statute of limitations.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

7.	Earnings Per Share

The Company computes earnings per share in accordance with ASC Topic 260, “ Earnings per share” and ASC Topic 260-10-45 “ Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities ”. Basic earnings per share for different classes of stock (common stock, unvested restricted stock and the Series B Preferred Stock) is calculated by dividing net income available to each class by the weighted average number of shares of each class. Diluted earnings per share is computed using the weighted average number of common stock, unvested restricted stock plus the potentially dilutive effect of common stock and Series B Preferred Stock equivalents.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

Earnings per share for the common stock, unvested restricted stock and Series B Preferred Stock under the two class method are presented below (dollars and shares in thousands, except per share data):


		Three Months Ended March 31,
		2014		2013
Net income attributable to iGATE common shareholders		$	23,338	$	27,145
Add: Dividend on Series B Preferred Stock			8,139		7,500

			31,477		34,645
Less: Dividends paid on
Series B Preferred Stock	[A]		8,139		7,500

Undistributed Income		$	23,338	$	27,145

Allocation of Undistributed Income :
Common stock	[B]	$	17,256	$	20,338
Unvested restricted stock	[C]		0		8
Series B Preferred Stock	[D]		6,082		6,799

		$	23,338	$	27,145

Shares outstanding for allocation of undistributed income:
Common stock			58,808		57,270
Unvested restricted stock			0		23
Series B Preferred Stock			20,726		19,147

			79,534		76,440

Weighted average shares outstanding:
Common stock	[E]		58,687		57,262
Unvested restricted stock	[F]		0		23
Series B Preferred Stock	[G]		20,726		19,147

			79,413		76,432

Weighted average common stock outstanding			58,687		57,262
Dilutive effect of stock options and restricted shares outstanding			1,854		1,741

Dilutive weighted average shares outstanding	[H]		60,541		59,003

Distributed earnings per share:
Series B Preferred Stock	[I=A/G]	$	0.39	$	0.39
Undistributed earnings per share:
Common stock	[J=B/E]	$	0.29	$	0.36
Unvested restricted stock	[K=C/F]	$	0.00	$	0.36
Series B Preferred Stock	[L=D/G]	$	0.29	$	0.36
Earnings per share-Basic:
Common stock	[J]	$	0.29	$	0.36
Unvested restricted stock	[K]	$	0.00	$	0.36
Series B Preferred Stock	[I+L]	$	0.68	$	0.75
Earnings per share-Diluted	[[B+C]/H]	$	0.29	$	0.34

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The number of outstanding options to purchase common shares for which the option exercise prices exceeded the average market price of the common shares aggregated 0.2 million and 0.7 million shares for the three months ended March 31, 2014 and March 31, 2013, respectively. These options were excluded from the computation of diluted earnings per share under the treasury stock method. The number of shares of outstanding Series B Preferred Stock for which the earnings per share exceeded the earnings per share of common stock aggregated to 20.7 million and 19.1 million shares for the three months ended March 31, 2014 and 2013, respectively. These shares were excluded from the computation of diluted earnings per share as they were anti-dilutive.

8.	Investments

Short term investments comprise the following (in thousands):


	As of March 31, 2014
	Carrying Value		Unrealized Gain		Fair Value
Mutual Funds
Liquid mutual funds	$	160,632	$	1,389	$	162,021
Fixed deposits with banks		175		0		175

	$	160,807	$	1,389	$	162,196


	As of December 31, 2013
	Carrying Value		Unrealized Gain		Fair Value
Mutual Funds
Liquid mutual funds	$	178,886	$	2,345	$	181,231
Fixed deposits with banks		170		0		170

	$	179,056	$	2,345	$	181,401

Contractual maturities of short-term and other investments in available for sale securities as of March 31, 2014 was as follows (in thousands):


	As of March 31, 2014
Due within one year	$	162,196

Realized gains and losses on the cost of securities sold or disposed is determined on First in First out (“FIFO”) method.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

Dividends from available for sale securities and gross realized gains and losses on sale of available for sale securities are as follows (in thousands):


	Three Months Ended March 31,
	2014		2013
Gross realized gains	$	5,108	$	15,277
Sale proceeds		213,053		627,387

The changes in the gross unrealized gain on marketable securities carrying value for the three months ended March 31, 2014 and 2013 are as follows (in thousands):


	Three Months Ended March 31,
	2014			2013
Unrealized gain on marketable securities at the beginning of the period	$	2,345		$	11,711
Reclassification of gain into earnings on maturity		(5,108	)		(15,277	)
Net unrealized gain/ (loss) due to changes in the fair value		4,152			11,075

Unrealized gain on marketable securities at the end of the period	$	1,389		$	7,509

9.	Accumulated Other Comprehensive Income (Loss )

The changes in the balances of accumulated other comprehensive income (loss), net of tax, by component for the three months ended March 31, 2014 and 2013 are summarized as follows (in thousands):


	Three Months Ended March 31,
	2014			2013
Unrealized gain on Marketable securities:
Beginning balance	$	1,548		$	8,275
Amount of gain (loss) recognized in other comprehensive income		2,741			8,445
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(3,354	)		(11,155	)
Portion attributable to Non-controlling interests		(3	)		0

Ending balance	$	932		$	5,565

Unrealized gain (loss) on cash flow hedges:
Beginning balance	$	(48	)	$	445
Amount of gain (loss) recognized in other comprehensive income		4,515			4,535
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(133	)		(1,496	)
Portion attributable to Non-controlling interests		(21	)		0

Ending balance	$	4,313		$	3,484

Actuarial gain (loss) relating to defined benefit plan:
Beginning balance	$	1,084		$	(123	)
Amount of gain (loss) recognized in other comprehensive income		355			294
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(39	)		19
Portion attributable to Non-controlling interests		(6	)		0

Ending balance	$	1,394		$	190

Foreign currency translation:
Beginning balance	$	(391,593	)	$	(283,180	)
Amount of gain (loss) recognized in other comprehensive income		29,573			17,383
Amounts of (gain) loss reclassified from accumulated other comprehensive income		0			0
Portion attributable to Non-controlling interests		1,751			0

Ending balance	$	(360,269	)	$	(265,797	)

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The changes in the tax expense (benefit) of accumulated other comprehensive income (loss), by component for the three months ended March 31, 2014 and 2013, are summarized as follows (in thousands):


	Three Months Ended March 31,
	2014			2013
Unrealized gain on Marketable securities:
Beginning balance	$	797		$	3,436
Amount of gain (loss) recognized in other comprehensive income		1,411			2,630
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(1,754	)		(4,122	)
Portion attributable to Non-controlling interests		(2	)		0

Ending balance	$	452		$	1,944

Unrealized gain (loss) on cash flow hedges:
Beginning balance	$	(23	)	$	184
Amount of gain (loss) recognized in other comprehensive income		2,325			1,812
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(70	)		(541	)
Portion attributable to Non-controlling interests		(12	)		0

Ending balance	$	2,220		$	1,455

Actuarial gain (loss) relating to defined benefit plan:
Beginning balance	$	559		$	(69	)
Amount of gain (loss) recognized in other comprehensive income		183			109
Amounts of (gain) loss reclassified from accumulated other comprehensive income		(21	)		7
Portion attributable to Non-controlling interests		(6	)		0

Ending balance	$	715		$	47

Foreign currency translation:
Beginning balance	$	0		$	0
Amount of gain (loss) recognized in other comprehensive income		0			0
Amounts of (gain) loss reclassified from accumulated other comprehensive income		0			0
Portion attributable to Non-controlling interests		0			0

Ending balance	$	0		$	0

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The following table summarizes the reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2014 and 2013(in thousands):


Accumulated Other Comprehensive Income – Components	Line item in Statement of Income	Amount reclassified from Accumulated Other Comprehensive Income
		Three Months Ended March 31,
		2014			2013
Available-for-sale securities:
Sale of Securities	Other Income, net	$	5,108		$	15,277
	Income tax expense		(1,754	)		(4,122	)
	Non-controlling interest, net of tax		(16	)		0

	Reclassification into earnings	$	3,338		$	11,155

Cash flow hedges:
Foreign exchange derivative contracts	Foreign exchange gain (loss), net	$	203		$	2,037
	Income tax expense		(70	)		(541	)
	Non-controlling interest, net of tax		(1	)		0

	Reclassification to earnings	$	132		$	1,496

Pension and other defined benefit liability:
Amortization of actuarial gain (loss)	Cost of revenues	$	60		$	(26	)
	Income tax expense		(21	)		7
	Non-controlling interest, net of tax		0			0

	Reclassification to earnings	$	39		$	(19	)

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

10.

Derivative Instruments and Hedging Activities

The Company enters into foreign currency forward and option contracts (“foreign exchange derivative contracts”) to mitigate and manage the risk of changes in foreign exchange rates on inter-company and end customer accounts receivables and forecasted sales and inter-company transactions. The Company hedges anticipated sales transactions that are subject to foreign exchange exposure with foreign exchange derivative contracts that are designated effective and that qualify as cash flow hedges under ASC Topic 815, “ Derivatives and Hedging ” (ASC No. 815).

As part of its hedge strategy, the Company also enters into foreign exchange derivative contracts which are replaced with successive new contracts up to the period in which the forecasted transaction is expected to occur i.e. (roll-over hedges). In case of rollover hedges, the hedge effectiveness is assessed based on changes in fair value to the extent of changes in spot prices and recorded in accumulated other comprehensive income (loss) until the hedged transactions occur and upon such occurrence gain or loss is reclassified to earnings in the consolidated statements of income. Accordingly, the changes in the fair value of the contract related to the changes in the difference between the spot price and the forward price (i.e. forward premium/discount) are excluded from assessment of hedge effectiveness and are recognized in consolidated statements of income and are included in foreign exchange gain (loss).

In respect of foreign exchange derivative contracts which hedge the foreign currency risk associated with both the anticipated sales transaction and the collection thereof (dual purpose hedges), the hedge effectiveness is assessed based on overall changes in fair value with the effective portion of gains or losses included in accumulated other comprehensive income (loss). The effective portion of gain or loss attributable to forecasted sales are reclassified from accumulated other comprehensive income (loss) and recognized in consolidated statements of income when the sales transaction occurs. Post the date of sales transaction, the Company reclassifies an amount from accumulated other comprehensive income (loss) to earnings to offset foreign currency translation gain (loss) recorded for the respective receivable during the period. In addition, the Company determines the amount of cost to be ascribed to each period of the hedging relationship based on the functional currency interest rate implicit in the hedging relationship and recognizes this cost by reclassifying it from accumulated other comprehensive income (loss) to consolidated statements of income for recognized receivables based on the pro rata method.

Changes in the fair value of cash flow hedges deemed ineffective are recognized in the consolidated statement of income and are included in foreign exchange gain (loss). The Company also uses foreign exchange derivatives contracts not designated as hedging instruments under ASC No. 815 to hedge intercompany and end customer accounts receivables and other monetary assets denominated in currencies other than the functional currency. Changes in the fair value of these foreign exchange derivative contracts are recognized in the consolidated statements of income and are included in foreign exchange gain (loss).

In respect of foreign exchange derivative contracts designated as hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company evaluates hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. If during this time, a contract is deemed ineffective, the change in the fair value is recorded in the consolidated statements of income and is included in foreign exchange gain (loss). In situations in which hedge accounting is discontinued and the foreign exchange derivative contract remains outstanding, the net derivative gain or loss continue to be reported in accumulated other comprehensive income unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The following table presents the aggregate contracted principal amounts of the Company’s foreign exchange derivative contracts:

OUTSTANDING CASH FLOW HEDGE TRANSACTIONS QUALIFYING FOR HEDGE ACCOUNTING (in thousands):


	As of
	March 31, 2014		December 31, 2013
Foreign Exchange Forward Contracts USD	$	122,300	$	94,300
Foreign Exchange Forward Contracts CAD	$	12,708	$	13,160
Foreign Exchange Forward Contracts GBP	$	21,618	$	14,041

OUTSTANDING FAIR VALUE HEDGE TRANSACTIONS NOT QUALIFYING FOR HEDGE ACCOUNTING (in thousands):


	As of
	March 31, 2014		December 31, 2013
Foreign Exchange Forward Contracts GBP	$	1,413	$	12,059
Foreign Exchange Forward Contracts CAD	$	3,745	$	0
Foreign Exchange Forward Contracts USD	$	8,890	$	0

The foreign exchange derivative contracts mature generally within twelve (12) months.

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the three months ended March 31, 2014 (in thousands):

Derivatives in

ASC Topic 815

Cash Flow

Hedging

Relationships

Amount of Gain
(Loss) recognized
in OCI on
Derivative

Location of Gain
(Loss) reclassified
from Accumulated
OCI into Income

Amount of Gain
(Loss) reclassified
from Accumulated
OCI into Income

Location of Gain

(Loss) recognized in
Income on
Derivative

Amount of Gain (Loss)
recognized in Income
Statement

(Effective Portion)

(Ineffective Portion and amount excluded

from effectiveness testing)

March 31, 2014

Foreign Exchange Contracts

6,840

Foreign exchange gain (loss), net

203

Foreign exchange gain (loss), net

*	Includes deferred gain on settled rollover derivatives amounting to $0.0 million for the three months ended March 31, 2014.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the three months ended March 31, 2013 (in thousands):

Derivatives in ASC

Topic 815 Cash

Flow Hedging

Relationships

Amount of Gain
(Loss) recognized
in OCI on
Derivative

Location of Gain
(Loss) reclassified
from Accumulated
OCI into Income

Amount of Gain
(Loss) reclassified
from Accumulated
OCI into Income

Location of Gain
(Loss) recognized in
Income on
Derivative

Amount of Gain
(Loss) recognized
in Income
Statement

(Effective Portion)

(Ineffective Portion and amount excluded
from effectiveness testing)

March 31, 2013

Foreign Exchange Contracts

6,347

Foreign exchange gain (loss), net

2,037

Foreign exchange gain (loss), net

799

*	Includes deferred gain on settled rollover derivatives amounting to $0.6 million for the three months ended March 31, 2013.

Derivatives not designated as hedging instruments (in thousands):


	Three Months Ended March 31,
	2014		2013
Statement of Income
Foreign exchange gain, net	$	493	$	3,029

These foreign exchange derivative contracts were entered into to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as inter-company and end customer receivables, and were not originally designated as hedges. Realized gains (losses) and changes in the fair value of these foreign exchange derivative contracts are recorded in foreign exchange gains (losses), net in the condensed consolidated statements of income.

Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets (in thousands):


Derivative Instruments – Foreign Exchange Derivative Contracts		As of
		March 31, 2014		December 31, 2013
Balance Sheet Location	Designated/Not Designated	Fair Value		Fair Value
Current Assets	Designated	$	6,565	$	832
	Not Designated	$	106	$	4
Current liabilities	Designated	$	0	$	904
	Not Designated	$	15	$	5

The estimated net amount of existing gains, net of taxes, as of March 31, 2014 that is expected to be reclassified from accumulated other comprehensive income (losses) into earnings within the next 12 months is $4.3 million.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

The Company utilizes standard counterparty master agreements containing provisions for netting of certain foreign currency transaction obligations and for set-off of certain obligations in the event of insolvency of one of the parties to the transaction. This provision may reduce the Company’s potential loss resulting from the insolvency of counterparty and would also reduce the counterparty’s potential overall loss resulting from the insolvency of the Company. In the condensed consolidated balance sheet, the Company records the foreign exchange derivative assets and liabilities at gross fair value. The potential effect of netting foreign exchange derivative assets and liabilities under the counterparty master agreement was as follows (in thousands):


	Gross Amount presented in the Condensed Consolidated Balance Sheet		Potential effect of rights of set off		Net amount of recognized assets/liabilities
As of March 31, 2014:
Foreign exchange derivative assets	$	6,671	$	15	$	6,656
Foreign exchange derivative liabilities	$	15	$	15	$	0

As of December 31, 2013:
Foreign exchange derivative assets	$	836	$	642	$	194
Foreign exchange derivative liabilities	$	909	$	642	$	267

11.

Fair Value Measurements

FASB ASC Topic 820 “Fair Value Measurements” establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Includes other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

In accordance with ASC 820, assets and liabilities are to be measured based on the following valuation techniques:

Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Income approach – Converting the future amounts based on the market expectations to its present value using the discounting methodology.

Cost approach – Replacement cost method.

The Company uses the market approach for measuring the fair value of the assets and liabilities. Cash equivalents, short term investments comprising of money market mutual funds and foreign currency derivative contracts are measured at fair value. The cash equivalents and money market mutual funds are valued using quoted market prices and classified within Level 1. The foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

Investments and Foreign exchange derivative contracts, as disclosed in Note 8 and 10, which are measured at fair value are summarized below (in thousands):


			Fair Value measurement at reporting date using
Description	As of March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Current Assets:
Short term investments:
a) Liquid mutual fund units	$	162,021	$	162,021	$	0	$	0
b) Fixed deposits with banks		175		175		0		0
Foreign exchange derivative contracts		6,671		0		6,671		0

Total current assets	$	168,867	$	162,196	$	6,671	$	0

Liabilities
Current Liabilities:
Foreign exchange derivative contracts	$	15	$	0	$	15	$	0

Total current liabilities	$	15	$	0	$	15	$	0


			Fair Value measurement at reporting date using
Description	As of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Current Assets:
Short term investments:
a) Liquid mutual fund units	$	181,231	$	181,231	$	0	$	0
b) Fixed deposits with banks		170		170		0		0
Foreign exchange derivative contracts		836		0		836		0

Total current assets	$	182,237	$	181,401	$	836	$	0

Liabilities
Current Liabilities:
Foreign exchange derivative contracts	$	909	$	0	$	909	$	0

Total current liabilities	$	909	$	0	$	909	$	0

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

12.

Employee Benefits

Defined Contribution Plan

The Company’s eligible employees in India participate in the Employees’ Provident Fund (the “Provident Fund”), which is a defined contribution plan. The employee and the Company make monthly contributions of a specified percentage of salary to the Provident Fund, which is administered by the prescribed authority in India. The aggregate contributions along with interest thereon can be withdrawn on retirement, death, incapacitation or termination of employment. The Company’s contribution to the Provident Fund was $2.1 million for each of the three months ended March 31, 2014 and 2013.

401(k) Plan

Eligible United States employees of the Company participate in an employee retirement savings plan (the “Plan”) under Section 401(k) of the United States Internal Revenue Code. The Plan allows for employees to defer a portion of their annual earnings on a pre-tax basis through voluntary contributions to the Plan. The Company is not currently making any matching contributions.

Defined Benefit Plan

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees in India. The plan provides a lump sum payment to the vested employees at retirement, death, incapacitation or termination of employment, subject to a specified period of service based on the respective employee’s salary and tenure of service. Liabilities with regard to the plan are determined by actuarial valuation.

The following table sets forth the net periodic cost recognized by the Company in respect of the Plan (in thousands):


	Three Months Ended March 31,
	2014			2013
Net periodic plan cost
Service cost	$	661		$	798
Interest cost		319			331
Expected return on plan asset		(228	)		(235	)
Amortization of actuarial gain		(59	)		(8	)

Net periodic plan cost for the period	$	693		$	886

Other Pension Benefits

One of the former founder directors of iGATE Computer (currently merged with iGATE Global), is entitled to receive pension benefits upon retirement or on termination from employment at the rate of 50% of his last drawn monthly salary. The payment of pension will start when he reaches the age of 65. The Company has invested in a plan with Life insurance Corporation of India which will mature at the time this founder director reaches the age of 65. Since the Company is obligated to fund the shortfall, if any, between the annuity payable and the value of the plan asset, the pension liability is actuarially valued at each balance sheet date.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

13.

Stock-based compensation

During the three months ended March 31, 2014 and 2013, the Company granted 18,000 and 44,000 options, respectively. During the three months ended March 31, 2014 and 2013, the Company granted 45,500 and 121,617 stock awards, respectively.

Stock-based compensation expense recorded in income from operations during the three months ended March 31, 2014 and 2013 (in thousands):


	Three Months Ended March 31,
	2014		2013
Stock -based compensation recorded in
Cost of revenues	$	1,819	$	1,337
Selling, general and administrative expense		2,478		1,788

Total stock-based compensation expense	$	4,297	$	3,125

During the three months ended March 31, 2014 and 2013, the Company issued 0.4 million and 0.3 million shares, respectively, upon exercise of stock options and awards.

14.

Other income, net

Components of other income, net for the three months ended March 31, 2014 and 2013 (in thousands):


	Three Months Ended March 31,
	2014			2013
Investment income	$	5,108		$	15,277
Interest income		1,625			1,704
Loss on sale of fixed assets		(47	)		(26	)
Other		668			325

Other income, net	$	7,354		$	17,280

15.

Concentration of revenues

The following is a concentration of revenues greater than 10% by customer for the periods shown:


	Three Months Ended March 31,
	2014			2013
General Electric Company		15	%		13	%
Royal Bank of Canada		10	%		12	%

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

16.

Segment Information

The Company’s Chief Executive Officer, who is also the Chief Operating Decision Maker, has recently regrouped the organization into vertical-based business units to bring in more industry knowledge and solutions, increase the depth and accountability to the business. However, the Company does not have discrete financial information as per the requirements of ASC 280 and as a result segment information is not presented.

17.

Guarantor Subsidiaries - Supplemental condensed consolidating financial information

In connection with the acquisition of iGATE Computer, the Company issued the Senior Notes which are the senior unsecured obligations of the Company. The Senior Notes are guaranteed by the Company’s 100% owned domestic subsidiaries iTI, iGATE Inc., and iGATE Holding Corporation (collectively, the “Guarantors”). The Company has not included separate financial statements of the Guarantors because they are 100% owned by the Company, the guarantees issued are full and unconditional, and the guarantees are joint and several. There are customary exceptions in the Indenture under which a subsidiary’s guarantee would terminate namely:

•

a permitted sale or other disposition by a guarantor of all or substantially all of its assets.

•

the designation or classification of a guarantor as an unrestricted subsidiary pursuant to the indenture governing the guarantees.

•

defeasance or discharge of the Senior Notes.

•

the release of a guarantor due to the operation of the definition of “Immaterial Subsidiary” in the documents governing the guarantees; or

•

the Senior Notes’ achievement of investment grade status.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

Condensed consolidating financial information for the Company and the Guarantors are as follows (in thousands):

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2014


	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	0		$	138,351		$	99,593		$	0		$	237,944
Restricted cash		0			360,000			0			0			360,000
Short-term investments		0			0			162,196			0			162,196
Accounts receivable, net		0			77,079			70,135			0			147,214
Unbilled revenues		0			49,668			38,555			0			88,223
Prepaid expenses and other current assets		16,868			5,703			30,902			0			53,473
Prepaid income taxes		0			955			8,845			0			9,800
Deferred tax assets		0			3,163			2,774			0			5,937
Foreign exchange derivative contracts		0			0			6,671			0			6,671
Inter-corporate loan		360,000			0			0			(360,000	)		0
Receivable from related parties		0			1,663			4,808			0			6,471
Receivable from group companies		47,902			0			44,360			(92,262	)		0

Total current assets		424,770			636,582			468,839			(452,262	)		1,077,929
Investment in subsidiaries		460,955			545,412			0			(1,006,367	)		0
Inter-corporate loan		410,000			2,482			0			(412,482	)		0
Deposits and other assets		4,640			1,256			17,785			0			23,681
Prepaid income taxes		0			0			34,644			0			34,644
Property and equipment, net		0			2,506			178,411			0			180,917
Leasehold land		0			0			78,405			0			78,405
Deferred tax assets		0			15,054			100			0			15,154
Goodwill		0			1,026			451,885			0			452,911
Intangible assets, net		0			113			120,181			0			120,294

Total assets	$	1,300,365		$	1,204,431		$	1,350,250		$	(1,871,111	)	$	1,983,935

LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0		$	1,719		$	11,770		$	0		$	13,489
Line of credit		0			0			52,000			0			52,000
Senior Notes		770,000			0			0			0			770,000
Term loans		0			0			90,000			0			90,000
Accrued payroll and related costs		0			15,592			30,468			0			46,060
Other accrued liabilities		34,468			24,972			41,792			0			101,232
Accrued income taxes		0			0			2,794			0			2,794
Foreign exchange derivative contracts		0			0			15			0			15
Deferred revenue		0			5,285			7,969			0			13,254
Inter-corporate loan		0			360,000			0			(360,000	)		0
Payable to group companies		0			92,262			0			(92,262	)		0

Total current liabilities		804,468			499,830			236,808			(452,262	)		1,088,844
Other long-term liabilities		0			186			4,002			0			4,188
Senior Notes		0			0			0			0			0
Term loans		0			0			270,000			0			270,000
Accrued income taxes		0			650			21,467			0			22,117
Inter-corporate loan		0			410,000			2,482			(412,482	)		0
Deferred tax liabilities		0			0			37,315			0			37,315

Total liabilities		804,468			910,666			572,074			(864,744	)		1,422,464

Series B Preferred stock		418,649			0			0			0			418,649
iGATE Corporation shareholders’ equity:
Common shares		598			330,000			53,451			(383,451	)		598
Common shares held in treasury, at cost		(14,714	)		0			0			0			(14,714	)
Additional paid-in capital		225,301			6,209			604,743			(622,916	)		213,337
Retained earnings		(133,937	)		(42,540	)		468,565			0			292,088
Accumulated other comprehensive loss		0			96			(353,726	)		0			(353,630	)

Total iGATE Corporation shareholders’ equity		77,248			293,765			773,033			(1,006,367	)		137,679
Non-controlling interest		0			0			5,143			0			5,143

Total equity		77,248			293,765			778,176			(1,006,367	)		142,822
Total liabilities, preferred stock and shareholders’ equity	$	1,300,365		$	1,204,431		$	1,350,250		$	(1,871,111	)	$	1,983,935

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013


	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	0		$	82,497		$	122,339		$	0		$	204,836
Restricted cash		0			360,000			0			0			360,000
Short-term investments		0			0			181,401			0			181,401
Accounts receivable, net		0			87,110			70,795			0			157,905
Unbilled revenues		0			29,309			32,115			0			61,424
Prepaid expenses and other current assets		11,997			3,693			28,802			0			44,492
Prepaid income taxes		0			797			41			0			838
Deferred tax assets		0			3,163			7,072			0			10,235
Foreign exchange derivative contracts		0			0			836			0			836
Inter-corporate loan		360,000			0			0			(360,000	)		0
Receivable from related parties		0			1,618			2,428			0			4,046
Receivable from group companies		21,332			0			24,952			(46,284	)		0

Total current assets		393,329			568,187			470,781			(406,284	)		1,026,013
Investment in subsidiaries		460,955			545,412			0			(1,006,367	)		0
Inter-corporate loan		410,000			2,476			0			(412,476	)		0
Deposits and other assets		5,596			1,084			18,250			0			24,930
Prepaid income taxes		0			0			32,160			0			32,160
Property and equipment, net		0			2,291			163,290			0			165,581
Leasehold land		0			0			76,732			0			76,732
Deferred tax assets		0			15,054			99			0			15,153
Goodwill		0			1,026			437,865			0			438,891
Intangible assets, net		0			130			119,132			0			119,262

Total assets	$	1,269,880		$	1,135,660		$	1,318,309		$	(1,825,127	)	$	1,898,722

LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0		$	1,834		$	7,434		$	0		$	9,268
Line of credit		0			0			52,000			0			52,000
Senior Notes		360,000			0			0			0			360,000
Term loans		0			0			90,000			0			90,000
Accrued payroll and related costs		0			19,086			38,007			0			57,093
Other accrued liabilities		11,550			24,012			44,223			0			79,785
Accrued income taxes		0			0			5,802			0			5,802
Foreign exchange derivative contracts		0			0			909			0			909
Deferred revenue		0			8,917			8,859			0			17,776
Inter-corporate loan		0			360,000			0			(360,000	)		0
Payable to group companies		0			26,446			19,838			(46,284	)		0

Total current liabilities		371,550			440,295			267,072			(406,284	)		672,633
Other long-term liabilities		0			165			3,367			0			3,532
Senior Notes		410,000			0			0			0			410,000
Term loans		0			0			270,000			0			270,000
Accrued income taxes		0			650			13,286			0			13,936
Inter-corporate loan		0			410,000			2,476			(412,476	)		0
Deferred tax liabilities		0			0			41,717			0			41,717

Total liabilities		781,550			851,110			597,918			(818,760	)		1,411,818

Series B Preferred stock		410,371			0			0			0			410,371
iGATE Corporation shareholders’ equity:
Common shares		594			330,000			53,451			(383,451	)		594
Common shares held in treasury, at cost		(14,714	)		0			0			0			(14,714	)
Additional paid-in capital		216,107			6,209			604,743			(622,916	)		204,143
Retained earnings		(124,028	)		(51,755	)		444,533			0			268,750
Accumulated other comprehensive loss		0			96			(387,211	)		0			(387,115	)

Total iGATE Corporation shareholders’ equity		77,959			284,550			715,516			(1,006,367	)		71,658
Non-controlling interest		0			0			4,875			0			4,875

Total equity		77,959			284,550			720,391			(1,006,367	)		76,533
Total liabilities, preferred stock and shareholders’ equity	$	1,269,880		$	1,135,660		$	1,318,309		$	(1,825,127	)	$	1,898,722

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THREE MONTHS ENDED MARCH 31, 2014


	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	184,776		$	179,146		$	(61,716	)	$	302,206
Cost of revenues (exclusive of depreciation and amortization)		0			136,944			113,552			(61,716	)		188,780

Gross margin		0			47,832			65,594			0			113,426
Selling, general and administrative expense		0			14,999			27,662			0			42,661
Depreciation and amortization		0			379			9,179			0			9,558

Income from operations		0			32,454			28,753			0			61,207
Interest expense		(19,003	)		0			(4,632	)		6			(23,629	)
Foreign exchange gain (loss), net		48			23			133			0			204
Other income (expense), net		17,324			(16,165	)		6,201			(6	)		7,354

Income before income taxes		(1,631	)		16,312			30,455			0			45,136
Income tax expense		0			7,097			6,328			0			13,425

Net income (loss)		(1,631	)		9,215			24,127			0			31,711
Non-controlling interest		0			0			95			0			95

Net income (loss) attributable to iGATE Corporation		(1,631	)		9,215			24,032			0			31,616
Accretion to preferred stock		139			0			0			0			139
Preferred dividend		8,139			0			0			0			8,139

Net income (loss) attributable to iGATE common shareholders	$	(9,909	)	$	9,215		$	24,032		$	0		$	23,338

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THREE MONTHS ENDED MARCH 31, 2013


	Issuer			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues	$	0		$	157,177		$	179,087		$	(61,346	)	$	274,918
Cost of revenues (exclusive of depreciation and amortization)		0			115,084			116,501			(61,346	)		170,239

Gross margin		0			42,093			62,586			0			104,679
Selling, general and administrative expense		0			15,283			27,509			0			42,792
Depreciation and amortization		0			327			8,944			0			9,271

Income from operations		0			26,483			26,133			0			52,616
Interest expense		(18,846	)		(1,072	)		(2,739	)		0			(22,657	)
Foreign exchange gain (loss), net		0			(128	)		2,609			0			2,481
Other income (expense), net		17,325			(17,449	)		17,404			0			17,280

Income before income taxes		(1,521	)		7,834			43,407			0			49,720
Income tax expense		0			3,656			11,304			0			14,960

Net income (loss)		(1,521	)		4,178			32,103			0			34,760
Non-controlling interest		0			0			0			0			0

Net income (loss) attributable to iGATE Corporation		(1,521	)		4,178			32,103			0			34,760
Accretion to preferred stock		115			0			0			0			115
Preferred dividend		7,500			0			0			0			7,500

Net income (loss) attributable to iGATE common shareholders	$	(9,136	)	$	4,178		$	32,103		$	0		$	27,145

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED MARCH 31, 2014


	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(9,909	)	$	9,215	$	24,032		$	0	$	23,338
Add: Non-controlling interest		0			0		95			0		95
Other comprehensive income:
Change in fair value on marketable securities		0			0		(613	)		0		(613	)
Unrecognized actuarial gain on pension liability		0			0		316			0		316
Change in fair value of cash flow hedges		0			0		4,382			0		4,382
Gain on foreign currency translation		0			0		29,573			0		29,573


Total comprehensive income (loss)		(9,909	)		9,215		57,785			0		57,091
Less: Total comprehensive income attributable to non-controlling interest		0			0		268			0		268

Total comprehensive income (loss) attributable to iGATE common shareholders	$	(9,909	)	$	9,215	$	57,517		$	0	$	56,823

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED MARCH 31, 2013


	Issuer			Guarantors		Non- Guarantors			Eliminations		Consolidated
Net Income (loss) attributable to iGATE common shareholders	$	(9,136	)	$	4,178	$	32,103		$	0	$	27,145
Add: Non-controlling interest		0			0		0			0		0
Other comprehensive income:
Change in fair value on marketable securities		0			0		(2,710	)		0		(2,710	)
Unrecognized actuarial gain on pension liability		0			0		313			0		313
Change in fair value of cash flow hedges		0			0		3,039			0		3,039
Gain on foreign currency translation		0			0		17,383			0		17,383

Total comprehensive income (loss)		(9,136	)		4,178		50,128			0		45,170
Less: Total comprehensive income attributable to non-controlling interest		0			0		0			0		0

Total comprehensive income (loss) attributable to iGATE common shareholders	$	(9,136	)	$	4,178	$	50,128		$	0	$	45,170

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THREE MONTHS ENDED MARCH 31, 2014


	Issuer			Guarantors			Non- Guarantors			Eliminations		Consolidated
Cash Flows From Operating Activities:
Net income (loss)	$	(1,631	)	$	9,215		$	24,127		$	0	$	31,711
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		0			379			9,179			0		9,558
Stock-based compensation		0			1,443			2,854			0		4,297
Realized gain on investments		0			0			(5,108	)		0		(5,108	)
Deferred gain on settled derivatives		0			0			0			0		0
Recovery of doubtful debts		0			(1,123	)		(26	)		0		(1,149	)
Deferred income taxes		0			0			(962	)		0		(962	)
Amortization of debt issuance costs		1,678			0			617			0		2,295
Loss on sale of property and equipment		0			0			47			0		47
Deferred rent		0			34			256			0		290
Excess tax benefits related to stock option exercises		0			(2,554	)		0			0		(2,554	)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues		0			(9,251	)		(7,433	)		0		(16,684	)
Inter-corporate current account		(26,570	)		65,813			(39,243	)		0		0
Prepaid expenses and other assets		0			(2,182	)		(1,300	)		0		(3,482	)
Accounts payable		0			(115	)		3,335			0		3,220
Accrued and other liabilities		17,325			31			(17,103	)		0		253
Deferred revenue		0			(3,632	)		(926	)		0		(4,558	)

Net cash flows (used in) provided by operating activities		(9,198	)		58,058			(31,686	)		0		17,174

Cash Flows From Investing Activities:
Purchase of property and equipment		0			(761	)		(15,213	)		0		(15,974	)
Proceeds from sale of property and equipment		0			0			80			0		80
Purchase of available-for-sale investments		0			0			(184,786	)		0		(184,786	)
Proceeds from maturities and sale of available-for-sale investments		0			0			213,053			0		213,053
Restricted cash		0			0			0			0		0
Receipts from (payments for) lease deposits		0			0			0			0		0
Investment in subsidiaries		0			0			0			0		0
Purchase of non-controlling interests		0			0			0			0		0

Net cash flows provided by (used in) investing activities		0			(761	)		13,134			0		12,373

Cash Flows From Financing Activities:
Payments on capital lease obligations		0			0			(111	)		0		(111	)
Payment of line of credit and term loans		0			0			0			0		0
Payment of debt related costs		0			0			0			0		0
Proceeds from exercise of stock options		6,644			(1,443	)		(2,854	)		0		2,347
Excess tax benefits related to stock option exercises		2,554			0			0			0		2,554

Net cash flows provided by ( used in) financing activities		9,198			(1,443	)		(2,965	)		0		4,790

Effect of exchange rate changes		0			0			(1,229	)		0		(1,229	)

Net change in cash and cash equivalents		0			55,854			(22,746	)		0		33,108
Cash and cash equivalents, beginning of period		0			82,497			122,339			0		204,836

Cash and cash equivalents, end of period	$	0		$	138,351		$	99,593		$	0	$	237,944

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THREE MONTHS ENDED MARCH 31, 2013


	Issuer			Guarantors			Non- Guarantors			Eliminations		Consolidated
Cash Flows From Operating Activities:
Net income (loss)	$	(1,521	)	$	4,178		$	32,103		$	0	$	34,760
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		0			327			8,944			0		9,271
Stock-based compensation		0			1,076			2,049			0		3,125
Realized gain on investments		0			0			(15,277	)		0		(15,277	)
Deferred gain on settled derivatives		0			0			37			0		37
Recovery of doubtful debts		0			0			(61	)		0		(61	)
Deferred income taxes		0			0			(2,161	)		0		(2,161	)
Amortization of debt issuance costs		1,521			157			721			0		2,399
Loss on sale of property and equipment		0			0			26			0		26
Deferred rent		0			0			(52	)		0		(52	)
Excess tax benefits related to stock option exercises		0			(387	)		0			0		(387	)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues		0			(19,508	)		10,408			0		(9,100	)
Inter-corporate current account		(21,382	)		(22,599	)		43,981			0		0
Prepaid expenses and other assets		0			(2,430	)		(4,157	)		0		(6,587	)
Accounts payable		0			67,475			(62,538	)		0		4,937
Accrued and other liabilities		17,325			(3,593	)		(15,975	)		0		(2,243	)
Deferred revenue		0			(2,632	)		(2,763	)		0		(5,395	)

Net cash flows (used in) provided by operating activities		(4,057	)		22,064			(4,715	)		0		13,292

Cash Flows From Investing Activities:
Purchase of property and equipment		0			(145	)		(6,211	)		0		(6,356	)
Proceeds from sale of property and equipment		0			0			43			0		43
Purchase of available-for-sale investments		0			0			(599,984	)		0		(599,984	)
Proceeds from maturities and sale of available-for-sale investments		0			0			627,387			0		627,387
Restricted cash		0			0			3,052			0		3,052
Receipts from (payments for) lease deposits		0			(17	)		318			0		301
Investment in subsidiaries		0			7,127			(7,127	)		0		0
Purchase of non-controlling interests		0			0			(5,370	)		0		(5,370	)

Net cash flows provided by (used in) investing activities		0			6,965			12,108			0		19,073

Cash Flows From Financing Activities:
Payments on capital lease obligations		0			0			(200	)		0		(200	)
Payment of line of credit and term loans		0			(25,000	)		(5,000	)		0		(30,000	)
Payment of debt related costs		0			0			(2,394	)		0		(2,394	)
Proceeds from exercise of stock options		3,670			(8,202	)		4,906			0		374
Excess tax benefits related to stock option exercises		387			0			0			0		387

Net cash flows provided by ( used in) financing activities		4,057			(33,202	)		(2,688	)		0		(31,833	)

Effect of exchange rate changes		0			0			(841	)		0		(841	)

Net change in cash and cash equivalents		0			(4,173	)		3,864			0		(309	)
Cash and cash equivalents, beginning of period		0			14,365			80,790			0		95,155

Cash and cash equivalents, end of period	$	0		$	10,192		$	84,654		$	0	$	94,846

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

18.

Commitments and contingencies

Capital commitments

As of March 31, 2014, the Company has open purchase orders totaling $38.2 million towards construction of new facilities and purchase of property and equipment.

Bank guarantees

As of March 31, 2014, guarantees and letters of credit provided by banks on behalf of the Company’s subsidiaries, to customs authorities, customers and vendors for capital procurements amounted to $3.7 million. These guarantees and letters of credit have a remaining term of approximately one to five years.

Other commitments

The Company’s business process delivery centers in India are 100% Export Oriented units or STPs and SEZs under the STP and SEZ guidelines issued by the Government of India. These units are exempted from customs, central excise duties, and levies on imported and indigenous capital goods, stores, and spares. The Company has executed legal undertakings to pay custom duties, central excise duties, levies, and liquidated damages payable, if any, in respect of imported and indigenous capital goods, stores, and spares consumed duty free, in the event that certain terms and conditions are not fulfilled.

The Company has entered into a service agreement with a customer that provides such customer the option, exercisable at any time by providing 60 days’ notice to the Company to acquire an equity stake of up to 7.00% of the Company’s outstanding voting shares at fair market value. The fair market value is the volume weighted average trading price of the Company’s shares on the NASDAQ Market for five consecutive trading days immediately before the date on which the customer delivers its notice under the option. The option does not restrict the customer in any way from buying the Company’s shares in the open market. The service agreement also requires the Company to register the shares upon exercise of the option by the customer and there are no events or circumstances that would require the Company to transfer consideration under the agreement.

Contingencies

The former Chief Executive Officer of the Company has filed a complaint before the Alameda County Superior Court of California seeking compensation for breach of contract, breach of the covenant of good faith, and fair dealing, various Labor Code violations, false promise, and defamation. The Company believes that it has valid defenses against this complaint and has filed a counter complaint on January 29, 2014. Based upon this belief and the inherent difficulties in evaluating the former Chief Executive Officer’s complaint at this early stage, the Company cannot reasonably estimate the potential loss, if any. Accordingly, no accrual for loss contingency has been recorded for this matter.

The Company is involved in lawsuits and claims which arise in the ordinary course of business. Management believes that the ultimate outcome of these matters will not have a material adverse impact on its financial position, results of operations and cash flows.

iGATE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

19.

Recently Issued Accounting Pronouncements

None

20.

Recently Adopted Accounting Pronouncements

In July 2013, the FASB issued an ASU No. 2013-11– “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward if such settlement is required or expected in the event the uncertain tax position is disallowed, which would require an entity to present the liability associated with an unrecognized tax benefit or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward. The ASU also mentions that, to the extent a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company has adopted this ASU effective January 1, 2014 and the adoption did not have a material impact on the Company’s condensed consolidated balance sheet or statement of income.

21.

Subsequent Events

On April 2, 2014, the Company completed the private placement of $325 million aggregate principal amount of 4.75% Senior Notes due 2019 (the “Notes”) to several initial purchasers. The Notes will mature on April 15, 2019, and bear interest at a rate of 4.75% per annum, payable semi-annually in cash in arrears on April 15 and October 15 of each year, beginning on October 15, 2014. The Notes are senior unsecured obligations of the Company and will be guaranteed by the Guarantors. The terms of the Indenture will, among other things, limit the ability of the Company and its restricted subsidiaries to (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock or repurchase their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets; (v) create liens or use assets as security in other transactions; (vi) merge, consolidate or transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. The Notes will be redeemable, in whole or in part, at any time on or after April 15, 2016, at the redemption prices specified in the Indenture, together with accrued and unpaid interest, if any, to the redemption date. At any time prior to April 15, 2016, the Company may redeem up to 40% of the aggregate principal amount of the Notes with the net cash proceeds from certain equity offerings at a redemption price equal to 104.75% of the principal amount thereof, together with accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to April 15, 2016, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes so redeemed, plus a “make whole” premium, together with accrued and unpaid interest, if any, to the redemption date. Upon the occurrence of a change of control triggering event specified in the Indenture, the Company must offer to purchase the Notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the statements in this Form 10-Q contain statements that are not historical facts and that constitute “forward-looking statements” within the meaning of such term under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include our financial growth and liquidity projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business, cash flows, costs and the markets in which we operate. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect” and similar expressions are intended to identify certain forward-looking statements. These forward-looking statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. While we cannot predict all of the risks and uncertainties, they include, but are not limited to, our ability to predict our financial performance, the level of market demand for our services, the highly-competitive market for the types of services that we offer, the impact of competitive factors on profit margins, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and grow our existing businesses, our ability to attract and retain qualified personnel, our ability to reduce costs and conserve cash, currency fluctuations and market conditions in India and elsewhere around the world, changes in generally accepted accounting principles and/or their interpretation and other risks that are described in more detail in our filings with the Securities and Exchange Commission, including our Form 10-K (“Form 10-K”) for the year ended December 31, 2013 and in this 10-Q under item 1 (A).

Unless otherwise indicated or the context otherwise requires, all references in this report to “iGATE”, the “Company”, “us”, “our”, or “we” are to iGATE Corporation, a Pennsylvania corporation, and its consolidated subsidiaries. iGATE Corporation, through its operating subsidiaries, is a worldwide provider of Information Technology (“IT”) and IT-enabled operations, and provides offshore outsourcing services to large and medium-sized organizations. These services include application management and development, verification and validation, enterprise application solutions like enterprise resource planning package implementation and integration services, business intelligence and data warehousing, technology consulting, infrastructure management and cloud computing services, IT consulting and governance, customized learning solutions, embedded systems development and engineering design services.

Website Access to SEC Reports

The Company’s website is http://www.igate.com. The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are available free of charge on the Investors page of the Company’s website as soon as reasonably practicable after the reports are filed electronically with the Securities and Exchange Commission.

Business Overview

We are a worldwide outsourcing provider of integrated end-to-end offshore centric information technology (“IT”) and IT-enabled operations solutions and services. We deliver a comprehensive range of IT services through globally integrated onsite and offshore delivery locations primarily in India. We offer our services to customers through industry focused practices, including insurance and healthcare, life sciences, manufacturing, retail and logistics, banking and financial services, communications, energy and utilities, product and engineering solutions, government solutions and media and entertainment. Our IT and IT-enabled services include application development, application management, verification and validation, enterprise application solutions, business intelligence and data warehousing, infrastructure management services, enterprise mobility, cloud services, embedded systems development, engineering design services, IT consulting, IT governance and customized learning solutions, customer interaction services (“CIS”) and business process outsourcing (“BPO”).

We provide full-spectrum consulting, technology and BPO, and product engineering solutions and services. In an increasingly fragmented and intensely competitive marketplace, we look to disrupt traditional billing models , like the existing “time-and-material” model used by a majority of our competitors in favor of a more “client-friendly business outcome” model. The business outcome model is a non-linear model which ensures that our clients “Pay for results”, that diminishes various risks for a client, as they only pay for services when they get assured results and not for the effort, time, manpower or processes that go into achieving the outcomes.

We believe our innovative approach of integrating IT and IT-enabled operations and our ability to leverage a global delivery model provides our clients with clearly differentiated and demonstrated value. We have adopted a global delivery model for providing varied and complex IT-enabled services to our global customers spread across multiple locations. With a global presence and world class delivery centers spanning across the Americas, EMEA and Asia-Pacific with 30,835 employees and 23 offices worldwide, our global delivery model includes a well defined, single business management system with best industry practices, models and standards. Our global delivery model leverages both onsite delivery and comprehensive offshore services, depending upon a client’s location and preferences. We target large and medium-sized organizations across a diverse set of industries, including financial services, insurance, manufacturing, retail, healthcare and media and entertainment.

We were founded in 1986. We are incorporated in Pennsylvania and our principal executive office is located at Bridgewater, New Jersey. We have operations in India, Canada, the United States, Belgium, Denmark, France, Finland, Germany, Ireland, Netherlands, Sweden, Switzerland, Luxemburg, Mexico, Singapore, Malaysia, Japan, Australia, the United Arab Emirates, South Africa, China, Mauritius and the United Kingdom.

A majority of our clients have headquarters in North America and operate internationally.

We market our service offerings to large and medium-sized organizations. Certain contracts are based upon a fixed price with payment based upon deliverables and/or project milestones reached. Certain contracts are time-and-materials based and are billed at an agreed upon hourly or daily rate. Certain contracts with no stated deliverables have a designated workforce and are based on fixed periodic payments. Some process outsourcing contracts provide pricing per transaction. Customers typically have the right to cancel contracts with minimal notice. Contracts with deliverables or project milestones can provide for certain penalties if the deliverables or project milestones are not met within contract timelines.

We service customers in a wide range of industries. Our largest customer is General Electric Company (“GE”) which accounted for approximately 15% and 13% of revenues for the three months ended March 31, 2014 and March 31, 2013, respectively. Our second largest customer, Royal Bank of Canada (“RBC”), accounted for approximately 10% and 12% of revenues for the three months ended March 31, 2014 and 2013, respectively. iGATE is a Global Preferred Partner of RBC.

Recent Developments

Conditional redemption of the 9% Senior Notes due 2016

On March 20, 2014, a conditional notice of redemption of the Company’s 9% Senior Notes due 2016 (the “Existing Notes”) was delivered to the holders thereof, calling for redemption of the entire outstanding $770,000,000 aggregate principal amount of the Existing Notes on April 22, 2014 (the “Redemption Date”) pursuant to the terms of the indenture (the “Indenture), dated as of April 29, 2011, by and among the Company, the Guarantors named therein and Wilmington Trust, National Association (as successor by merger to Wilmington Trust, FSB), as trustee, governing the Existing Notes. The Redemption Price will equal 100% of the principal amount of the Existing Notes plus the Applicable Premium, which will be calculated by or on behalf of the Company pursuant to the formula set forth in the Indenture (the “Redemption Price”).

Issuance of New Senior Notes

On March 19, the Company entered into a Purchase Agreement (the “Purchase Agreement”) by and among the Company, iGATE Technologies, Inc. (“iTI”), iGATE Inc. (“iGI”), iGATE Holding Corporation (“Holding” and collectively with iTI and iGI, the “Guarantors”) and RBC Capital Markets, LLC, as representative of the several initial purchasers, relating to the issuance and sale by the Company to the Initial Purchaser of $325 million in aggregate principal amount of the Company’s 4.75% senior notes due 2019 (the “Notes”). The Company intends to use the net proceeds of the Offering, together with cash, the proceeds from its 2013 term loan and a draw on its revolving credit facility, to redeem its $770 million in aggregate principal amount of the Company’s 9.0% senior notes due 2016.

The Notes are issued pursuant to an indenture, dated as of April 2, 2014, by and among the Company, the Guarantors and Wilmington Trust, National Association, as trustee. The Notes are being offered to the Initial Purchasers as a private placement and have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). The Initial Purchasers intend to sell the Notes only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S of the Securities Act. The Purchase Agreement contains customary representations, warranties, agreements, indemnification obligations, including for liabilities under the Securities Act and other obligations and termination provisions of the Company, certain of its subsidiaries and the Initial Purchasers.

Reportable Financial Segments

The Company’s Chief Executive Officer, who is also the Chief Operating Decision Maker, has recently regrouped the organization into vertical-based business units to bring in more industry knowledge and solutions, increase the depth and accountability to the business. However, the Company does not prepare discrete financial information as per the requirements of ASC 280 and as a result segment information is not presented.

Critical Accounting Policies

Our critical accounting policies are described in the summary of significant accounting policies as discussed in Note 1 of our Form 10-K.

Recently Issued Accounting Pronouncements

None

Results of Operations from Continuing Operations for the Three Months Ended March 31, 2014 as Compared to the Three Months Ended March 31, 2013 (Dollars in thousands):


	Three Months Ended March 31,
	2014						2013						% change of Amount from comparable period
	Amount			% of Revenues			Amount			% of Revenues			% change of Amount from comparable period
Revenues	$	302,206			100.0	%	$	274,918			100.0	%		9.9	%
Cost of revenues ^(a)		188,780			62.5			170,239			61.9			10.9

Gross margin		113,426			37.5			104,679			38.1			8.4
Selling, general and administrative expense		42,661			14.1			42,792			15.6			(0.3	)
Depreciation and amortization		9,558			3.2			9,271			3.4			3.1

Income from operations		61,207			20.2			52,616			19.1			16.3
Interest expense		(23,629	)		(7.8	)		(22,657	)		(8.2	)		4.3
Foreign exchange gain, net		204			0.1			2,481			0.9			(91.8	)
Other income		7,354			2.4			17,280			6.3			(57.4	)

Income before income taxes		45,136			14.9			49,720			18.1			(9.2	)
Income tax expense ^(b)		13,425			4.4			14,960			5.4			—

Net income		31,711			10.5			34,760			12.7			(8.8	)
Non-controlling interest ^(c)		95			0.0			0			0.0			—

Net income attributable to iGATE		31,616			10.5			34,760			12.7			(9.0	)
Accretion to preferred stock		139			0.0			115			0.0			20.9
Preferred dividend		8,139			2.7			7,500			2.7			8.5

Net income attributable to iGATE common shareholders	$	23,338			7.8	%	$	27,145			10.0	%		(14.0	)%

(a)

Cost of revenues is exclusive of depreciation and amortization.

(b)

As the effective tax rate is a better comparable measure, the percent change from comparable period is not computed.

(c)

As there is no amount in the previous period, the percent change from previous period is not computed.

Revenues

Revenues increased by 9.9% for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. The increase is directly attributable to the combination of increased business with our recurring customers by 8.5% and business with new customers by 2.9%, which was partly offset by the cessation of business with certain existing customers by 0.8%. In addition, the movement of the U.S. dollar (“USD”) as against various other currencies during the three months ended March 31, 2014 as compared to the corresponding period in the previous year had a net adverse impact on our revenues by 0.7%.

Our top five customers accounted for 38.5% and 40% of the revenues for the three months ended March 31, 2014 and 2013, respectively. We continue to derive a significant portion of our revenues from our customers in the United States and Canada, which constitutes about 77.6% and 80.3% of revenue for the three months ended March 31, 2014 and 2013, respectively.

Revenues by Geography

The following table presents our consolidated domestic and international revenues as a percentage of consolidated revenues based on customer geography (in thousands):


	Three Months Ended March 31,
	2014				2013
	Amount		%		Amount		%
Revenues:
United States	$	205,259		67.9	$	191,802		69.8
Canada		29,214		9.7		29,021		10.6
EMEA ⁽¹⁾		49,824		16.5		34,838		12.6
Asia Pacific		17,909		5.9		19,257		7.0

Total revenues	$	302,206		100.0	$	274,918		100.0

(1)

Comprises of Europe, Middle East and African countries.

Gross margin

Our Gross Margin percentage was 37.5% for the three months ended March 31, 2014, as compared to 38.1% for the three months ended March 31, 2013. The details of gross margin are as follows (in thousands):

Gross Margin Metrics:


	Three Months Ended March 31,
	2014		2013
Revenue	$	302,206	$	274,918
Cost of revenues:
Direct salary costs		151,761		140,395
Direct travel costs		14,678		12,612
Direct other costs		22,341		17,232

Gross Margin	$	113,426	$	104,679

As we conduct business through our globally integrated onsite and offshore delivery locations, primarily in India, the strengthening or weakening of the USD against other currencies, has a direct effect on our costs by reducing or increasing the cost of our services in offshore delivery centers which impacts our profitability.

During the three months ended March 31, 2014, the decrease in gross margin percentage was directly attributable to an increase in salaries, performance incentives and other costs directly associated with billable professionals, including payroll taxes by 1.5%, an increase in immigration costs including visa fees by 0.8%, increase in insurance, travel and other related expenses by 0.7% which was offset by favorable movement of the USD against the INR impacting our gross margin by 2.4%.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) include all costs that are not directly associated with revenue-generating activities. These include employee costs, corporate costs and facilities costs. Employee costs include selling, marketing and administrative salaries and related employee benefits, and training costs. Corporate costs include costs such as marketing and advertisement expense, reorganization costs, legal, accounting and outside consulting fees. Facilities costs primarily include rent and communications costs. The SG&A expense details are as follows (in thousands):


	Three Months Ended March 31,
	2014		2013
Employee costs	$	22,574	$	20,490
Travel costs		2,854		3,241
Corporate costs:
- Marketing costs		1,382		2,708
- Legal costs		977		492
- Other corporate costs		3,666		4,563

Total Corporate costs		6,025		7,763
Facility costs		11,208		11,298

Selling, general and administrative expenses	$	42,661	$	42,792

Total SG&A expenses for the three months ended March 31, 2014 decreased marginally as compared to the three months ended March 31, 2013. However, employee and legal costs increased which was offset by decrease in marketing and other corporate costs.

Employee costs increased by $2.1 million for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, resulting from an increase due to salary costs of $1.4 million and employee stock-based compensation expenses of $0.7 million.

Our corporate costs decreased by $1.7 million for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. Marketing costs decreased by $1.3 million due to reduced marketing activities. Legal costs increased by $0.5 million primarily due to increased professional fees related to ongoing general litigation matters. Other corporate costs decreased by $0.9 million mainly due to reversal of provision for doubtful debts of $1.1 million, decrease in merger and reorganization expenses of $0.3 million incurred in connection with implementation of structural changes, professional and accounting fees of $0.3 million. The Company received a service tax refund of $0.9 million for the three months ended March 31, 2013, which was recognized in the earnings.

Depreciation and amortization costs

Depreciation and amortization costs were consistent at 3.2% and 3.4% of revenue for the three months ended March 31, 2014 and 2013, respectively.

Operating income

Our operating margin (operating income as a percentage of revenue) was 20.2% and 19.1% for the three months ended March 31, 2014 and 2013, respectively. The increase was mainly due to increased business resulting in increased revenues thereby contributing to the margins.

Interest expense

Interest expenses were 7.8% and 8.2% of revenues for the three months ended March 31, 2014 and 2013, respectively. The details of interest expense are as follows (in thousands):


	Three Months Ended March 31,
	2014		2013
Interest on Senior Notes (including amortization of debt issuance costs)	$	19,003	$	18,845
Interest expense on line of credit and term loans (including amortization of debt issuance costs)		3,587		3,688
Interest on uncertain tax position		991		107
Other interest charges		48		17

	$	23,629	$	22,657

The decrease in interest expense as a percentage of revenue is due to higher revenue base for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013. However, the interest expense increased in absolute terms by $1.0 million for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 primarily on account of higher interest provision towards uncertain tax positions by $0.8 million.

Foreign exchange gain, net

Foreign exchange gain was $0.2 million and $2.5 million for the three months ended March 31, 2014 and 2013, respectively.

We recognized foreign currency gain of $0.7 million and $5.9 million on foreign exchange derivative contracts related to inter-company and end customer receivables and forecasted revenues for the three months ended March 31, 2014 and 2013, respectively.

We also recognized a foreign currency loss of $2.2 million on the re-measurement related to other monetary assets and liabilities and gain of $1.7 million on the re-measurement of the unsecured revolving working credit facility for the three months ended March 31, 2014, as compared to a loss of $3.7 million on the re-measurement of other monetary assets and liabilities, a gain of $0.7 million on the re-measurement of unsecured revolving working credit facility and a loss of $0.5 million on re-measurement of redeemable non-controlling interest for the three months ended March 31, 2013.

Other income, net

Other income was 2.4% and 6.3% of revenues for the three months ended March 31, 2014 and 2013, respectively. The details of other income are as follows (in thousands):


	Three Months Ended March 31,
	2014			2013
Investment income	$	5,108		$	15,277
Interest income		1,625			1,704
Loss on sale of fixed assets		(47	)		(26	)
Other		668			325

Other income, net	$	7,354		$	17,280

The decrease in other income is primarily due to the reduction in the investment income. Our investment base as of January 01, 2014 and 2013 was $181.4 million and $510.8 million, respectively.

Interest received on tax refunds from tax authorities amounted to $0.6 million for the three months ended March 31, 2014 as compared to $1.6 million for the three months ended March 31, 2013. Interest received from one of the customers as part of the receivables settlement is $0.7 million for the year ended March 31, 2014.

Income taxes

Our effective tax rate (“ETR”) was 29.7% and 30.1% during the three months ended March 31, 2014 and 2013, respectively.

During the first quarter of 2014, the Company filed amended tax returns for prior assessment years for its India jurisdiction in order to claim certain additional benefits and also reassessed India tax positions for the open assessment years, which led to a lower tax expense of $1.1 million during the three months ended March 31, 2014.

Non-controlling interest

In 2012, we delisted the fully paid-up equity shares of iGATE Computer Systems Limited (“iGATE Computer”) and recorded a redeemable non-controlling interest liability for the balance shares, which was valued at an exit price of INR 520 per share. The redeemable non-controlling interest holders were not entitled to any share of profits and hence, no profits are attributed to non-controlling interest for the three months ended March 31, 2013.

Post the approval of the merger scheme of iGATE Global Solutions Limited (“iGATE Global”) on May 10, 2013 by the High Court of Judicature at Mumbai approving the merger of iGATE Computer with iGATE Global, shareholders of iGATE Computer who did not tender their shares during the exit period (until May 27, 2013) were issued iGATE Global shares in the ratio of five equity shares of iGATE Global for twenty two equity shares of iGATE Computer. Subsequent to the expiry of the exit offer period, the

Company had no obligation to redeem the shares and accordingly the remaining redeemable non-controlling interest was reclassified to permanent equity. The shares held by general public as of March 31, 2014 represents approximately 0.5% of the outstanding share capital of iGATE Global.

For the three months ended March 31, 2014, we recorded $0.1 million share of profits and $0.2 million of accumulated other comprehensive income attributable to non-controlling interest.

Preferred dividend

On February 1, 2011, pursuant to the securities purchase agreement with Viscaria Limited dated January 10, 2011, we issued 210,000 shares of Series B Preferred Stock for a consideration of $210 million and an additional 120,000 shares were issued on May 9, 2011 for a consideration of $120 million. We have accrued for cumulative dividends of $8.1 million and $7.5 million at a rate of 8.00% per annum, compounded quarterly, for the three months ended March 31, 2014 and 2013, respectively.

Use of non-GAAP Financial Measures:

We believe that providing Adjusted EBITDA and non-GAAP net income and non-GAAP basic and diluted earnings per share in addition to the related GAAP measures provides investors with greater transparency to the information used by our management in our financial and operational decision-making. These non-GAAP measures are also used by management in connection with our performance compensation programs.

These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, U.S GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in the financial tables below.

We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. These non GAAP measures should be considered supplemental in nature and should not be considered in isolation or be construed as being more important than comparable GAAP measures.

The non-GAAP financial measures contained herein exclude the following items:

•

Amortization of intangible assets: Intangible assets primarily comprise of customer relationships. We incur charges relating to the amortization of these intangibles. These charges are included in our GAAP presentation of earnings from operations, operating margin, net income and diluted earnings per share. We exclude these charges for purposes of calculating these non-GAAP measures.

•

Stock-based compensation: Although stock-based compensation is an important component of the compensation of our employees and executives, determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expense recorded may not reflect the actual value realized upon the future exercise or termination of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock-based compensation is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.

•

Foreign exchange (gain)/loss: From time to time, we recognize foreign currency losses on re-measurement of escrow account balance and foreign exchange gains on re-measurement of redeemable non-controlling interest liability. We believe that eliminating the non-capitalized items for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current performance and comparisons to its past performance.

•

Delisting expenses We voluntarily delisted the equity shares of our majority owned subsidiary, iGATE Computer from the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited and the American Depository Shares from the New York Stock Exchange. Delisting is an infrequent activity and expenses incurred in connection therein are inconsistent in amount and are significantly impacted by the timing and nature of the delisting. We believe that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to its past operating performance.

•

Merger and reorganization expenses: We are merging and reorganizing our overseas subsidiaries and branches with a view to simplifying the corporate structure and have incurred legal and professional expenses in connection with these actions. Merger and reorganization is an infrequent activity and expenses incurred in connection therein are inconsistent in amount and significantly impacted by the timing and nature of the reorganization. We believe that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

•

Preferred dividend and accretion to preferred stock: We have issued 8.00% Series B Preferred Stock. We also incurred issuance costs that have been netted against the proceeds received from the issuance of the Series B Preferred Stock. The Series B Preferred Stock is being accreted over a period of six years. Although, the effect of inclusion of equivalent units of common stock towards convertible participating preferred stock is anti-dilutive for GAAP purposes, the non-GAAP diluted earnings per share has been calculated assuming the conversion of all outstanding shares of preferred stock into equivalent units of common stock. We believe that eliminating these expenses as well as inclusion of equivalent units of common stock towards the preference shares to compute diluted earnings per share for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.

From time to time in the future, there may be other items that we may exclude in presenting our financial results.

The table below presents a reconciliation of our non-GAAP financial measures to the most comparable GAAP measures for each of the three months ended March 31, 2014 and 2013, respectively (in thousands, except for per share data):


	Three Months Ended March 31,
	2014			2013
GAAP Net Income attributable to iGATE common shareholders	$	23,338		$	27,145
Adjustments:
Preferred dividend and accretion to preferred stock		8,278			7,615
Amortization of Intangible assets		2,580			2,748
Stock-based compensation		4,297			3,125
Delisting expenses		0			93
Merger and reorganization expenses		130			419
Foreign exchange loss on acquisition hedging and re-measurement		0			401
Income tax adjustments		(2,243	)		(1,681	)

Non-GAAP Net income attributable to iGATE common shareholders	$	36,380		$	39,865

Basic EPS (GAAP) to Basic EPS (Non-GAAP):
BASIC EPS (GAAP)	$	0.29		$	0.36
Preferred dividend and accretion to preferred stock		0.11			0.10
Amortization of Intangible assets		0.03			0.04
Stock-based compensation		0.06			0.04
Delisting expenses		0.00			0.00
Merger and reorganization expenses		0.00			0.00
Foreign exchange loss on acquisition hedging and re-measurement		0.00			0.00
Income tax adjustments		(0.03	)		(0.02	)

BASIC EPS (Non-GAAP)	$	0.46		$	0.52

Diluted EPS (GAAP) to Diluted EPS (Non-GAAP):
Diluted EPS (GAAP)	$	0.29		$	0.34
Preferred dividend and accretion to preferred stock		0.10			0.10
Amortization of Intangible assets		0.03			0.04
Stock-based compensation		0.06			0.04
Delisting expenses		0.00			0.00
Merger and reorganization expenses		0.00			0.01
Foreign exchange loss on acquisition hedging and re-measurement		0.00			0.00
Income tax adjustments		(0.03	)		(0.02	)

Diluted EPS (Non-GAAP)	$	0.45		$	0.51

Weighted average shares outstanding, Basic		58,687			57,285
Add: Assumed preferred stock conversion		20,726			19,147

Non-GAAP weighted average shares outstanding, Basic		79,413			76,432

Weighted average dilutive common shares outstanding		60,541			59,003
Add: Assumed preferred stock conversion		20,726			19,147

Weighted average dilutive common equivalent shares outstanding		81,267			78,150

Non-GAAP Disclosure of Adjusted EBITDA

We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net income plus (i) depreciation and amortization, (ii) interest expense, (iii) income tax expense, minus (iv) other income, net plus (v) foreign exchange (gain)/loss, (vi) stock-based compensation (vii) delisting expenses and (viii) merger and reorganization expenses. We eliminated the impact of the above as we do not consider them as indicative of our ongoing operating performance. These adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA: (i) as a factor in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our credit agreement and our indenture use measures similar to Adjusted EBITDA to measure our compliance with certain covenants.

Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

•

Adjusted EBITDA does not reflect our cash expenditures or future requirements, for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements; non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; and

•

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA supplementally.

The table below presents Adjusted EBITDA for each of the three months ended March 31, 2014 and 2013, respectively (in thousands):


	Three Months Ended March 31,
	2014			2013
	(in thousands)
Net income	$	31,711		$	34,760
Adjustments:
Depreciation and amortization		9,558			9,271
Interest expenses		23,629			22,657
Income tax expense		13,425			14,960
Other income, net		(7,354	)		(17,280	)
Foreign exchange gain		(204	)		(2,481	)
Stock-based compensation		4,297			3,125
Delisting expenses		0			93
Merger and reorganization expenses		130			419

Adjusted EBITDA (a non-GAAP measure)	$	75,192		$	65,524

The Company presents the non-GAAP financial measure Adjusted EBITDA because, management uses this measure to monitor and evaluate the performance of the business and believes the presentation of this measure will enhance the investors’ ability to analyze trends in the business and evaluate our underlying performance relative to other companies in the industry.

Liquidity and Capital Resources

Our cash balances are held in numerous locations throughout the world, of which we hold approximately $246.3 million of cash, cash equivalents and short-term investments in our foreign subsidiaries as of March 31, 2014. Amounts held outside of the United States are utilized to support non-U.S. liquidity needs. Our ongoing cash flows and external borrowings in the United States are expected to be sufficient to meet our primary operating liquidity needs, in the United States, for at least twelve (12) months following this report.

We have provided for the United States federal tax liability on the post-acquisition and pre-merger earnings and profits of the former iGATE Computer (currently merged with iGATE Global), India. The Company intends to use the remaining accumulated and future earnings of merged entities as well as other foreign subsidiaries to expand operations outside the United States and accordingly, undistributed earnings and profits are deemed permanently reinvested. However, if our intent is to change and we elected to repatriate such undistributed foreign earnings back to United States, it could result in additional income tax payments in future years. We estimate the potential tax liability relating to the repatriation of such undistributed foreign earnings to be approximately $182.0 million as of March 31, 2014.

The following table summarizes the sources and uses of cash from our condensed consolidated statements of cash flow (in thousands):


	Three Months Ended March 31,
	2014			2013
Net cash provided by operating activities	$	17,174		$	13,292
Net cash provided by investing activities		12,373			19,073
Net cash provided by/(used in) financing activities		4,790			(31,833	)
Effect of exchange rate changes		(1,229	)		(841	)

Net change in cash and cash equivalents	$	33,108		$	(309	)

Cash from Operations

Our largest source of operating cash flows is cash collections from our customers for different information technology services we render under various Statements of Work. Our primary uses of cash from operating activities are for personnel related expenditures, leased facilities and taxes.

Net cash provided by operating activities increased by $3.9 million for the three months ended March 31, 2014 as compared to the three months ended March 31, 2013, primarily due to higher non-cash charges such as depreciation, amortization of intangible assets and stock-based compensation which was partially offset by increases in accounts receivable and unbilled revenues resulting from an increased business.

Investing Activities

Cash provided by investing activities for the three months ended March 31, 2014 was $12.4 million as compared to $19.1 million for the three months ended March 31, 2013.

Our investment portfolio and other investments decreased by $28.3 million for the three months ended March 31, 2014 as compared to $27.4 million for the three months ended March 31, 2013.

During the three months ended March 31, 2013, $5.4 million was used to purchase 0.6 million shares of iGATE Computer and released the restricted cash of $3.05 million on utilization of the same.

Capital expenditures were $16.0 million and $6.4 million for the three months ended March 31, 2014 and 2013, respectively. Significant portions of the capital expenditures were due to the expansion of our campus facilities located in our Indian centers.

Financing Activities

Cash provided by financing activities was $4.8 million for the three months ended March 31, 2014 as compared to cash used in financing activities of $31.8 million for the three months ended March 31, 2013.

The net proceeds from the exercise of employee stock options were $2.3 million and $0.4 million for the three months ended March 31, 2014 and 2013, respectively.

The cash used during the three months ended March 31, 2013 was primarily due to the repayment of $30.0 million towards the borrowed credit facilities which was availed from banks to meet working capital and other general corporate requirements, incurrence of debt related cost of $2.4 million.

Our primary future cash requirements will be to fund working capital, debt service, capital expenditures, and benefit obligations. In addition to our working capital requirements, we expect our primary cash requirements for 2014 to be as follows:

•

Debt service —We expect to make payments of approximately $49.5 million during the remaining of 2014 for interest associated with Senior Notes (including new Senior Notes) and bank borrowings.

•

Capital expenditures —We expect to spend approximately $100.6 million for new and existing facility expansion and new hardware and software during the remaining of 2014. Of this, we have open purchase obligations of $38.2 million towards construction of new facilities and purchase of property and equipment. We will fund all capital expenditures through a combination of available cash reserves and short term investments and expect to fund the costs of future expansion through our net cash flows provided by operations.

We and our subsidiaries may from time to time seek to retire or purchase our outstanding debt (including publicly issued debt) through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Future Sources of Liquidity

We expect our primary source of cash to be positive net cash flows provided by operating activities. Further, we continue to focus on cost reductions and have initiated steps to reduce overheads and provide cash savings.

On March 20, 2014, we served the conditional notice to the holders of the Senior Notes calling for redemption of entire outstanding amount of $770 million together with a make whole premium of $36.3 million on April 22, 2014. The redemption of the Senior Notes is being done by refinancing it partly with new 4.75% Senior Notes due 2019 amounting to $325 million which was completed on April 2, 2014 together with term loan proceeds of $360 million, cash generated by the operations of Company and utilization of the Revolving Credit Facility, if required.

The Company currently has two revolving credit facilities providing for borrowings of up to an aggregate of $120 million subject to certain contractual limitations. As of March 31, 2014, we had borrowed $52 million under the revolving credit facilities. Both revolving credit facilities include other conditions that, if not complied with, could restrict our availability to borrow.

Our Senior Notes and credit agreements contain various covenants which are subject to a number of limitations and exceptions. The indenture governing the Notes requires us to comply with Consolidated Priority Debt Leverage Ratio and a Fixed Charge Coverage Ratio when certain events occur. These ratios are based on what we refer to as “Adjusted EBITDA”, which is defined under “Use of non-GAAP Financial Measures” in this Form 10 Q. Non-compliance with such covenants could affect our liquidity. We are currently in compliance with all covenants associated with our borrowings. The specific covenants and related definitions can be found in the applicable indenture and credit agreements, each of which we have previously filed with the Securities and Exchange Commission.

For more information on the revolving credit facilities and the restrictions on borrowing there under, including information on the covenants, please refer to Note 4, Borrowings, Note 5, Senior Notes and Note 21, Subsequent Events, to our unaudited condensed consolidated financial statements included in this Form 10-Q.

In order to meet our cash needs we may, from time to time borrow under our credit facilities or issue long term or short-term debt or equity, if the market and our credit facilities and the indentures governing our notes permit us to do so. For more information on the income tax consequences of the repatriation of the earnings of our foreign subsidiaries, please refer to the disclosure provided in Liquidity and Capital Resources included in this Form 10 Q. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.

Based on past performance and current expectations, we expect our existing cash, cash equivalents and short-term investments of $760.1 million (inclusive of restricted cash of $360 million held for repayment of a portion of existing Senior Notes in April 2014) as of March 31, 2014, and our ongoing cash flows, external borrowings or foreign earnings that are not deemed permanently reinvested, to be sufficient to meet our operating liquidity requirements described above for at least the twelve (12) months following this report.

Debt Service Obligations

As of March, 31, 2014, principal payments due under our indebtedness were $1.2 billion, excluding capital lease obligations of $1.1 million. Our interest expense for the three months ended March 31, 2014 was $20.3 million.

Our leverage requires that a substantial portion of our cash flows from operations be dedicated to the payment of principal and interest on our indebtedness. We continually monitor our exposure to the risk of increased interest rates as portions of our borrowings under our credit facilities are at variable rates of interest.

The Company has made all scheduled payments timely under the indenture governing its Senior Notes, and the revolving credit facilities.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Factors

Market risk factors associated with our business are discussed in Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2013. There have been no material changes from the market risk factors previously disclosed in the Company’s Form 10-K.

Effect of Hypothetical Currency Rate Fluctuations

Our primary net foreign currency exposure is the Indian Rupee. The fair value of foreign exchange contracts is subject to changes in foreign currency exchange rates.

As of March 31, 2014, the potential gain or loss in the fair value of the Company’s outstanding foreign exchange derivative contracts assuming hypothetical 10%, 5%, 2% and 1% fluctuations in currency rates would be approximately:


	Valuation given X% decrease In Rupee / USD rate								Fair Value as of March 31, 2014		Valuation given X% increase in Rupee / USD rate
	(10%)		(5%)		(2%)		(1%)		Fair Value as of March 31, 2014		1%		2%		5%			10%
Rupee to U.S. Rate		53.89		56.89		58.68		59.28		59.88		60.48		61.08		62.87			65.87
Derivative Instruments	$	26.4	$	16.0	$	10.3	$	8.4	$	6.7	$	4.9	$	3.2	$	(1.8	)	$	(9.5	)

Seasonality

Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies, which vary by country and by operating company.

Economic Trends and Outlook

According to Gartner Inc. (Source: Gartner Forecast Alert: IT Spending, Worldwide, 1Q14 Update, ID Number: G00262487) , an IT research and advisory company, the IT Services industry worldwide IT spending is forecasted to total $964 billion in 2014, a 4.6 % growth from 2013 spending of nearly $922 billion.

(Disclaimer: The Gartner Report described herein, represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Report) and the opinions expressed in the Gartner Report(s) are subject to change without notice.)

The global economic recovery continues and modest growth in IT spending is expected. However, uncertainties surrounding the prospects for an upturn in global economic growth remain major hindrances to IT growth. This uncertainty has caused pessimistic business and consumer sentiment throughout the world. The economy is experiencing a reduction in IT outsourcing specifically in collocation, hosting and data center outsourcing. The industry is aggressively pursuing innovations, by increasingly planning growth around cloud computing services, that it expects to stimulate demand beyond such modest growth. Besides organic growth, industry players are also aggressively pursuing mergers and acquisitions to stimulate growth. We believe that our business model is somewhat diversified, both geographically and operationally as we serve both IT and IT-enabled solutions. We believe our strategy of a global delivery model positions us well to provide a greater breadth of services, expertise and solutions in catering to market needs and opportunities.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 Rules 13a-15(b) and 15d-15(b). Based upon, and as of the date of this evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On December 2, 2013, the Company’s former Chief Executive Officer, filed a complaint against the Company before the Alameda County Superior Court of California seeking compensation for breach of contract, breach of the covenant of good faith, and fair dealing, various Labor Code violations, false promise, and defamation. The Company believes that it has valid defenses against this complaint and has filed a counter complaint on January 29, 2014.

ITEM 1A.

RISK FACTORS

Except for the following, there are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” in Part I of the Company’s Form 10-K. The information below updates, and should be read in conjunction with, the risk factors and information disclosed in the Form 10-K.

Our substantial level of indebtedness could materially adversely affect our financial condition and prevent us from fulfilling our obligations under the existing debt.

In April 2014, we sold 4.75% Senior Notes (the “Notes”) due 2019 amounting to $325 million through private placement, which together with term loan proceeds of $360 million from a consortium of banks, cash generated by the operations of the Company and utilization of the Revolving Credit Facility, if required, will be used to redeem the entire outstanding existing Senior Notes of $770 million. Despite of the contemplated extinguishment of Senior Notes of $770 million in April, 2014, the Company will still have substantial amount of indebtedness which could have material impact and would make it more difficult for us to satisfy our obligations with respect to the outstanding debt; limit our ability to borrow additional funds, or to sell assets to raise funds, if needed, for working capital, capital expenditures, acquisitions or other purposes; increase our vulnerability to adverse economic and industry conditions; require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities or other purposes, such as funding our working capital and capital expenditures; limit our flexibility in planning for, or reacting to, changes in the business and industry in which we operate; limit our ability to service our indebtedness; place us at a competitive disadvantage compared to any less leveraged competitors; and prevent us from raising the funds necessary to repurchase all notes tendered to us upon the occurrence of certain changes of control, which failure to repurchase would constitute a default under the Indenture and debt agreements.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, cash flows, results of operations, prospects or ability to satisfy our obligations under the Senior Notes and existing debt.

Claims of creditors of any existing and future subsidiaries which do not guarantee the Notes will be structurally senior and have priority over holders of the Notes with respect to the assets and earnings of such subsidiaries.

All liabilities of any of our existing and future subsidiaries that do not guarantee the Notes will be structurally senior to the Notes to the extent of the value of the assets of such non-guarantor subsidiaries. Accordingly, claims of holders of the notes will be structurally subordinate to the claims of creditors of such non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon liquidation or otherwise, to us or a guarantor of the notes.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.

Our debt currently has a non-investment grade rating, and there can be no assurances that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital, which could have a material adverse impact on our financial condition, cash flows and results of operations.

There is no public market for the Notes and we do not know if a market will ever develop or, if a market does develop, whether it will be sustained or provide Note holders with adequate liquidity and the holders may only transfer the notes in a transaction registered under, or exempt from the registration requirements of, the Securities Act.

The notes are a new issue of securities and there is no existing trading market for the notes. Although the Initial Purchasers have informed that they intend to make a market in the notes, they have no obligation to do so and may discontinue making a market at any time without notice. Accordingly, we cannot assure you that a liquid market will develop or continue for the Notes, that the holders will be able to sell Notes at a particular time or at the price that they desire. We do not intend to apply for listing or quotation of the Notes on any securities exchange or stock market. The notes have not been registered under the Securities Act or any state or other applicable securities laws and, unless so registered, may not be re-offered or re-sold except pursuant to an exemption from the registration requirements of the Securities Act and applicable state and other securities laws. Under the registration rights agreement applicable to the notes and the guarantees, we and the guarantors will be required to use commercially reasonable efforts to commence an exchange offer to exchange the notes and guarantees within a specified period of time for equivalent securities under the Securities Act or to register the resale of the notes and guarantees under the Securities Act. However, we cannot assure you that we will be successful in having any such registration statement declared effective.

ITEM 6.

EXHIBITS

(a)

Exhibits


3.1		Third Amended and Restated Articles of Incorporation of iGATE, dated May 5, 2011, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on May 11, 2011.

3.2		Amended and Restated Bylaws of iGATE are incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, filed on August 14, 2000.

3.3		Statement with Respect to Shares—8% Series B Convertible Participating Preferred Stock, no par value per share, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on February 4, 2011.

4.1		Indenture, dated April 2, 2014, by and among iGATE, iGATE Technologies, Inc., iGATE, Inc. and iGATE Holding Corporation and Wilmington Trust, National Association is incorporated by reference to Exhibit 4.1 to iGATE’s Form 8-K, filed on April 7, 2014.

4.2		Registration Rights Agreement, by and among iGATE Corporation, iGATE Technologies Inc., iGATE, Inc., iGATE Holding Corporation and RBC Capital Markets, LLC as the representative of the initial purchasers named in Schedule I thereto, dated April 2, 2014, is incorporated by reference to Exhibit 4.2 to iGATE’s Form 8-K, filed on April 7, 2014.

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer is filed herewith.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer is filed herewith.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 18th day of April 2014.


		iGATE CORPORATION

April 18, 2014		/s/ ASHOK VEMURI
		Ashok Vemuri President, Chief Executive Officer and Director

		/s/ S UJIT S IRCAR
		Sujit Sircar Chief Financial Officer

EXHIBIT INDEX



3.1		Third Amended and Restated Articles of Incorporation of iGATE, dated May 5, 2011, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on May 11, 2011.

3.2		Amended and Restated Bylaws of iGATE are incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, filed on August 14, 2000.

3.3		Statement with Respect to Shares—8% Series B Convertible Participating Preferred Stock, no par value per share, is incorporated by reference to Exhibit 3.1 to iGATE’s Form 8-K, filed on February 4, 2011.

4.1		Indenture, dated April 2, 2014, by and among iGATE, iGATE Technologies, Inc., iGATE, Inc. and iGATE Holding Corporation and Wilmington Trust, National Association is incorporated by reference to Exhibit 4.1 to iGATE’s Form 8-K, filed on April 7, 2014.

4.2		Registration Rights Agreement, by and among iGATE Corporation, iGATE Technologies Inc., iGATE, Inc., iGATE Holding Corporation and RBC Capital Markets, LLC as the representative of the initial purchasers named in Schedule I thereto, dated April 2, 2014, is incorporated by reference to Exhibit 4.2 to iGATE’s Form 8-K, filed on April 7, 2014.

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer is filed herewith.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer is filed herewith.

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Chief Financial Officer is filed herewith.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.